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December 2011
Greetings from StratoChem Services!


We at StratoChem Services would like to wish you a happy and a healthy holiday season.  We hope this past year has been a joyous one, and as it draws to an end, we hope you are able to spend time with friends and family.  We wish you a peaceful and prosperous new year.


Happy Holidays from all of us here at StratoChem Services

HSBC Bank Egypt Successfully Closes a USD50 million Finance for IPR Petroleum

 ( - December 15, 2011) 


Egyptian flag small 


     HSBC Bank Egypt announced the closing of a USD50 million financing for IPR Petroleum. The facility will be used to refinance existing credit facilities, as well as the development and production of the company's oil and gas assets in Egypt.


       The IPR has been an active Exploration and Production player in Egypt for over 20 years where it operates various assets onshore in the Western Desert and offshore in the Gulf of Suez. IPR has an attractive portfolio of properties and prospects with significant upside potential which will be exploited over the next 4 years.  IPR is involved in 6 Joint Venture Operating Companies with multinational partners and looks to grow this position through future acquisitions.


       Sam Dabbous, Chief Operating Officer of IPR Petroleum said: "HSBC Bank Egypt has played a vital role in the success of the company in the past years, where the Bank has provided innovative financial solutions tailored to the company, in addition to excellent execution skills and capabilities, which makes us proud to be associated with HSBC Bank Egypt on the long-term."  


      Commenting on the Facility and IPR's recent investments, Dabbous, reported that since 2006, IPR has invested approximately USD300 Million in the Egyptian energy sector including USD200 Million in the Western Desert and USD 100 Million in the Gulf of Suez.  This included seismic programs, wells, facilities, platforms and pipelines.


       Mr. Dabbous added: "Being able to secure this facility enhances our strong relationship with the Bank at this important time in Egypt. We expect that the facility will increase production and reserves. Hence, the value of the company to our shareholders. We affirm our commitment to the energy sector in light of the positive climate on the long term, and we look forward to our continued growth with the support of our partners who share our commitment and vision."


       Helmy Ghazi, Head of Structured Finance at HSBC Bank Egypt said: "IPR reserve based lending facility is the third of its kind this year, which adds to the credibility of HSBC Bank Egypt in financing the Egyptian hydrocarbon industry, especially in the current difficult economic conditions."


     "The oil and gas sector is one of the most strategic sectors that the Bank supports in Egypt, as it is considered the backbone of the Egyptian economy. We have an unparalleled track record of delivering truly bespoke products and insightful advice to Oil & Gas players," added Helmy.


10 Firms Get Priority on Libyan Crude


(  - December 20, 2011)


  Libyan flag NEW  


     Libya's state-run oil firm, National Oil Corporation (NOC), has named ten companies that will get priority access to term supplies of its crude oil in 2012. The ten firms include traditional buyers among European refiners.


    A senior source at NOC told Reuters that firms like Repsol, Total, ENI, Royal Dutch Shell, OMV, ConocoPhillips, Saras, BP, Galp, and ExxonMobil would definitely be on the receiving end of Libyan crude. "We will give priority to all these companies," said the source. A full list will be published on NOC's website at a later date.


   NOC has also issued its first Official Selling Prices (OSPs) since the conflict to oust former leader Muammar Qaddafi began in February. OSPs included volumes of the Sarir grade which has been sold separately by NOC subsidiary Agoco since the conflict began in February. "It looks like it (the NOC) is reverting back to the old ways," said a Mediterranean crude oil trader in a Reuters report. 


Iran Excludes Poland's PGNiG from Lavan Gas Field Development


(  - December 20,  2011)


Iranian Flag


    Iran has excluded Poland's state-controlled gas monopoly PGNiG from developing a gas field, accusing the company of dragging its feet over the project, the semi-official Mehr news agency reported on Monday.


     Iran has toughened its stance over foreign companies that it says are not fulfilling their promises. At the same time, international trade sanctions have hit foreign investment in its vital energy sector. Oil Minister Rosatm Qasemi has said the Islamic state does not need foreign investment in its oil and gas industries. 


  'Four years after negotiations between National Iranian Oil Co (NIOC) and PGNiG for signing a $7 billion contract to develop the Lavan gas field, this European company was excluded from the project due to missing several deadlines,' Mehr reported. According to the report, a $1.9 billion deal would soon be ceded to a consortium of domestic contractors.


   Iran also announced in October that it had excluded Russian gas export monopoly Gazprom from Azar, a major onshore oil field, saying it had failed to live up to its undertakings.


     In February 2008 PGNiG said it had signed a preliminary deal with the Iranian Offshore Oil Co. to cooperate on managing already discovered gas reserves. Poland, which largely depends on imports of Russia gas, has made diversification of sources of supply a priority in recent years.


     The offshore Lavan natural gas field, which was discovered in 2003, has reserves in place of around 10 trillion cubic feet.


      Iran sits on the world's second-largest gas reserves after Russia. But U.S. sanctions hindering access to technology has slowed development of gas exports. The West suspects that the refusal of the Islamic state to halt sensitive nuclear activities might be aimed at making an atomic bomb. Tehran denies this and says it needs nuclear technology to meet domestic demand for power.

Iraq: Gulf Keystone Petroleum Spuds Shaikan-6 Appraisal Well


( - December 20, 2011)                                                                          

 Iraq Flag


     Gulf Keystone Petroleum has announced that the Shaikan-6 appraisal well has spudded on the Shaikan Block in the Kurdistan Region of Iraq on 16th December 2011.


  Shaikan-6 is the fourth deep appraisal well to be drilled on the Company's major oil discovery with independently audited gross oil-in-place volumes of between 8 billion barrels and 13.4 billion barrels calculated on the P90 to P10 basis with a mean value of 10.5 billion barrels.


     Shaikan-6 is being drilled 9 km to the east of the Shaikan-2 appraisal well to an estimated total depth of 3,800 metres subject to technical conditions. Shaikan-6, the last appraisal well to be drilled as part of the Shaikan appraisal programme, will target prospective intervals in the Jurassic and Triassic


     Shaikan-6 will be followed by the Shaikan-7 exploration well in 2012, which will target potential untapped resources in the lower Triassic and the Permian, the Company's deepest undrilled horizon to date.


   Gulf Keystone is the Operator of the Shaikan Block with a working interest of 75 per cent and is partnered with Kalegran (a 100 per cent subsidiary of MOL Hungarian Oil and Gas) and Texas Keystone, which have working interests of 20 per cent and 5 per cent respectively.


  John Gerstenlauer, Gulf Keystone's Chief Operating Officer commented:


    'Shaikan-6 is the tenth well to be drilled across the Company's four adjacent blocks and the seventh well to be drilled on the blocks which Gulf Keystone operates in the Kurdistan Region of Iraq. This number of completed and current exploration and appraisal wells comfortably places Gulf Keystone among top three operators in the region. As part of our high impact drilling campaign, planned and funded through 2012, the Shaikan-5 and Shaikan-6 appraisal wells will provide us with better understanding of the flanks of the massive Shaikan structure and its yet untapped resources.'

Sea Dragon Action in Egypt


( - December 19,  2011) 


Egyptian flag small


     Sea Dragon Energy Inc. reported that initial response to water-flooding operations has been observed on the the NW Gemsa Concession's Al Amir Field in Egypt, namely from the Al Amir SE#6 Shagar and Al Amir SE#4 Rahmi wells. The company said that cumulative injection to date is 690,000 barrels at a current rate of 9,900 bwpd in two injectors, Al Amir SE#7 and Al Amir SE#8 wells.


      The Sea Dragon said that with the success in Al Amir SE field it is now more confident on the future water flood potential in the Geyad field.


       On the Geyad Field the Geyad-4 well was spud on October 26 and successfully drilled to a total depth of 6,830 ft. The objective of this well was to appraise the oil potential up-dip from Geyad-2St in the Shagar and Rahmi zones of the Kareem Formation. The well encountered 2.5 ft of possible pay in the shallow South Gharib heavy oil reservoir before encountering a fault and sidetracked twice to the southwest, closer to Geyad-2St.


      The Rahmi zone was penetrated in the second sidetrack in Geyad-4st2, 100 ft higher than in the Geyad-2st well, thus allowing better access to the Rahmi oil reserves.  The Rahmi zone was perforated in the interval 6,340-6,395 ft and flowed on test at a rate of 380 bpd of oil and 0.84 Mmscf/d of gas. The Geyad-4st2 well will be placed on production soon and is well positioned to benefit from water injection in the Geyad #5 well, expected to commence shortly.


      Current production from the Al Amir SE and Geyad fields is running steady at around 7,500 bopd (750 bopd net to Sea Dragon). Cumulative production from the NW Gemsa Concession has now exceeded 6.8 million barrels of 42°API Crude oil.


      The Al Ola-2 well, previously tested, remains shut-in at this time as the partners on the NW Gemsa await approval from the government for extending the Al Amir SE Development Lease to the south and west of the current lease boundary, to include Al Ola 1 and 2 oil wells.


    Sea Dragon has a 10% working interest in the NW Gemsa Concession while Vegas as operator holds 50%, and Circle Oil holds the remaining with 40%.


     On the Kom Ombo Concession where Sea Dragon is partnered with Dana Gas, drilling rig tenders have been sent out for the upcoming five-well program and negotiations are currently underway to finalize and sign the rig contract. Mobilization to Kom Ombo is expected to take place in January with the first well anticipated to spud in early-February.


     Two exploration wells will be drilled which will fulfill the exploration commitment. Three additional development wells are planned, primarily targeting large reserves in the Kom Ombo Formation.


     Current production from the Al Baraka field is approximately 620 bopd, 310 bopd net to Sea Dragon.


      Sea Dragon has a 50% working interest and is a joint operator of the Kom Ombo Concession with Dana Gas holding the remaining 50%.

Total Expects to See Pre-War Libya Oil Output by January


( - December 21, 2011)


Total logo 


       French oil major Total expects its oil production in Libya to return to pre-war levels as soon as next month, a company executive told Reuters on Tuesday. 'We have been at normal levels of production offshore since Sept. 23, and our field onshore will now restart. We should be back to our usual level (of output) very quickly, at the least in January,' said Bernard Avignon, Total's head of exploration and production (E&P) in Libya.


     Avignon made the comments on the sidelines of a delegation of French business officials travelling to Tripoli. Earlier in the day, Michel Seguin, special adviser to Total's E&P head, said the French group expected to restart its onshore production in a few days. 'There are still some logistical issues that need to be sorted out,' Seguin said.


     Total had production of 55,000 barrels a day in Libya prior to the eight-month war that overthrew Muammar Gaddafi. Libya was Africa's third-largest producer before the war, pumping around 1.6 million barrels per day and exporting about 1.3 million bpd, mostly to European clients. The country's oil output has now reached 1 million bpd, its oil minister said last week after an OPEC meeting, in a further sign of a more rapid-than-expected recovery.


      Total's operations currently focus on the Al Jurf oilfield offshore and the Mabruk field onshore, but the French group also hopes to capitalise on France's backing of the country's new leaders during the civil war. Last week, a senior source at Libya's National Oil Corporation (NOC) told Reuters Total would be among 10 companies that would get priority access to term supplies of its crude oil in 2012.


Gulf Keystone Not Up for Sale 


( - December 19, 2011)

Gulf Keystone logo

    Gulf Keystone on Monday noted the continued unfounded press speculation regarding a potential offer for the Company. The Board of Gulf Keystone does not normally comment on speculation, but confirms that it remains committed to creating value for shareholders, via the continuing 2011/2012 exploration and appraisal programme on its world-class assets in the Kurdistan Region of Iraq.


       Whilst there is clearly increasing interest in the region in which Gulf Keystone operates, the Board is not in discussions with regard to a sale of the Company.

Algeria: Petroceltic International Announces Ratification of Enel Farmout Transaction


( - December 19, 2011)

Algerian Flag 

     Petroceltic International has announced the approval by the Council of Ministers in Algeria of its sale of an 18.375% interest in the Isarene PSC to Enel Trade. This is the final stage of the approval process relating to the transaction between Petroceltic and Enel, announced in April, and paves the way for completion of the transaction within 5 days and the settlement of all amounts outstanding within 30 days thereafter.


    Under the terms of the agreement ENEL has: 

  • Agreed to pay up to US$ 36.75 million to Petroceltic, which equates to 24.5% of all back costs incurred from signing of the PSC in 2005 until the end of the exploration period in April 2010;
  • Committed to fund 49% of the cost of the first six appraisal wells in an enlarged Isarene appraisal campaign and of a contingent additional well, of which costs are capped, in aggregate, at US$ 145 million; and 
  • Agreed to pay Petroceltic a contingent cash consideration, up to a maximum of US $75 million, such amount determined by a number of factors based the results of the appraisal programme, such as the overall level of reserves and the production profile.

    Amounts outstanding under this agreement or to be paid under cash call arrangements relating to the 2011 appraisal programme, currently exceed $103 million. Upon completion, Petroceltic will operate the permit with a 56.625 % interest, Sonatrach will maintain a 25% interest, and Enel will hold an 18.375% interest.


     Brian O'Cathain, Chief Executive of Petroceltic commented:


    'We are delighted to announce that the final approval in Algeria of the Enel transaction has been granted which will allow for the deal's swift completion in the coming days. We look forward to formally welcoming Enel as an important new partner to the Isarene licence. This transaction, allied to the excellent results from our appraisal campaign, has confirmed the quality and value of our Algerian asset and provides a firm foundation for the ongoing growth and diversification of our business.'

Baker Hughes Wins $640M Iraq Oil-Drilling Contract


( - December 20, 2011)


  Iraq Flag        


    U.S. oil-services company Baker Hughes Inc. (BHI) has secured a contract worth up to $640 million to drill 60 wells at Iraq's southern Zubair oil field, according to people familiar with the contract.


   An Iraqi government spokesman earlier Tuesday said the Iraqi government and a consortium led by Italy's Eni SpA (E) had awarded the contract to an unnamed U.S. company.


  Ali Al Dabbagh said the council of ministers approved a recommendation submitted by the oil ministry to award the contract to the American company.


   Giant oil-field services companies such as Schlumberger AG (SLBS.VI), Weatherford International Ltd. (WFT) and Halliburton Co. (HAL) have lost the deal to Baker Hughes, the people familiar with the contract said.


    Drilling would be completed in three years on a turn-key basis, Dabbagh said.


     The 20-year Zubair service contract was awarded at an Iraqi licensing auction held in 2009 to the Eni-led group, which also includes U.S. Occidental Petroleum Corp. (OXY) and Korea Gas Corp. (036460.SE), or Kogas.


     The Zubair field--one of the largest of Iraq's oil fields--was producing 195,000 barrels a day before it was awarded to the Eni-led group. Production has since reached about 300,000 barrels a day and is expected to rise to a plateau of 1.125 million barrels a day in 2016 as the full field-development plan is completed.


     Earlier this year, Baker Hughes won a deal from OAO Lukoil Holdings (LKOH.RS) to drill 23 wells in Iraq's super-giant West Qurna phase two oil field in southern Iraq.


Fairmount Marine Tows Noble Paul Romano to Egypt 


( - December 21, 2011)  


Egyptian flag small    


     Fairmount Marine reported that its tug, the Fairmount Sherpa, has safely towed the semi-submersible drilling rig Noble Paul Romano from the GoM to offshore Egypt for work on the North Hap'y oilfield.  The tow was over a distance of close to 8,000 miles.


     Fairmount Sherpa was mobilized first to Rotterdam for supplies and bunkers before it sailed to Jamaica for a rendezvous with Noble Paul Romano. The tug hooked up the tow and the convoy set sail for San Juan, Puerto Rico, for bunkers.


      After the successful crossing of the North Atlantic the convoy safely arrived at Las Palmas, Canary Islands, for another bunker stop. At this stop the tug assisted in cargo and personnel transfer for the Noble Paul Romano as well.  

Issue: 12 - 2011

Christmas in Egypt
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Earlier this month, from December 5th through December 7th, Joe Pape held a three-day course entitled Deep Water Exploration.  The course was given to geologists and geophysicists from the Egyptian Natural Gas Holding Company (EGAS), with sponsorship from BP.  StratoChem's own Hossam Ali led the second day of the course on basin modeling. 


The overall goal of the course was to teach the attendees appropriate subsurface technologies for exploration in deep water, with particular emphasis on the Eastern Mediterranean. The course focused on the geological fundamentals that drive commercial success, encouraging participants to think about the technical side of the business.  From basin evaluation through to economic evaluation, attendees worked through the step-by-step procedures that lead to a successful bid on exploration acreage. The learning was reinforced through a competitive bid round exercise, using industry seismic data. Mr. Pape, with his extensive experience in the oil industry hopes that this course will create a common dialogue and language among those involved in block evaluation.


Prior to the Deep Water Exploration course for EGAS, Mr. Pape had given the same course in both Tunisia and Lebanon, receiving positive feedback in both countries.  The course was met with an equally warm reception in Egypt, where attendees reported that the course exceeded their expectations and gave them practical advice.  Many found the step-by-step instruction, coupled with advice from the instructors, confidence building.  Ultimately the course was deemed very rewarding.


Should you or anyone you know be interested in attending a similar course in the future please feel free to contact StratoChem Services for help in arranging this.  Please direct inquiries to


Pape EGAS course

Joe Pape interacting with students during the 

Deep Water Exploration course for EGAS

In This Issue
HSBC Bank Egypt Successfully Closes a USD50 million Finance for IPR Petroleum
10 Firms Get Priority on Libyan Crude Oil
Iran Excludes Poland's PGNiG from Lavan Gas Field Development
Iraq: Gulf Keystone Petroleum Spuds Shaikan-6 Appraisal Well
Sea Dragon Action in Egypt
Total Expects to See Pre-War Libya Oil Output by January
Gulf Keystone Not Up for Sale
Algeria: Petroceltic International Announces Ratification of Enel Farmout Transaction
Baker Hughes Wins $640M Iraq Oil-Drilling Contract
Fairmount Marine Tows Noble Paul Romano to Egypt

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